Economic and Fiscal Outlook – October 2023
This report provides a baseline projection to help parliamentarians gauge potential economic and fiscal outcomes under current policy settings.
Following the contraction in real GDP in the second quarter, we project the Canadian economy to stagnate in the second half of this year and growth to remain weak through the first half of 2024. We project the unemployment rate to rise to 6% in the middle of next year and to remain elevated through the first half of 2025.
Assuming no new measures and existing temporary measures sunset as scheduled, the deficit is projected to increase to $46.5 billion in the current fiscal year, 2023-24, and the federal debt ratio to rise to 42.6% of GDP. Under status quo policy, the deficit is projected to decline over the medium term, falling to $8.2 billion in 2028-29.
In terms of downside risks, we judge that the most important risk is a larger-than-expected impact on the Canadian economy, including housing, from the Bank of Canada’s restrictive monetary policy, which would negatively affect the Canadian economy and federal finances. In terms of upside risks, we judge that the most important risk is higher-than-projected spending by provincial governments.
Parliamentary Budget Officer